Enabling Innovative Cloud Services for CSPs

Selma Turki, ITS Services Executive IBM North-West Africa selma.turki@tn.ibm.com ITU Workshop on “Cloud Computing”(Tunis, Tunisia, 18-19 June 2012) Enabling innovative cloud servicesAn IBM point-of-view for Communications Service Providers Tunis, Tunisia, 18-19 June 2012

Cloud Market overview The cloud marketplace is real; the cloud marketplace is now; and CSPs are well positioned to take advantage of this opportunity

Future success requires execution on three key imperativesBased on market research, the CEO Telecom Survey, Telco 2015 Study IBM CEO Survey Recommendations for Telecom 3 Key Imperatives to Smarter Communications Embody creative leadership Reinvent customer relationships Build operating dexterity Enable New Services & Business Models IBM Telco 2015 Study Common Critical Success Attributes Differentiate the Customer Experience Cost-effective ultra-fast broadband deployment strategy Network / customer insights to enhance experience & optimize cost Improve Operational Efficiencies & Reduce Costs Culture of collaboration Agile, flexible and reconfigurable processes and infrastructure Cost containment

Public cloud service revenue is growing in importance and CSPs are in the strongest position to capitalize on this opportunity 1 Comprehensive network capabilities 2 Large enterprise customer base 5 Owning the complete end-to-end delivery chain is a big advantage Advantages for CSPs as aCloud Service Provider 3 Strong brand recognition 4 Extensive marketing experience with many sales channels Publically available information sources

Cloud Computing Market Breakdown $126B • Largest segment • Low barriers to entry • Focus of SMB • e.g. email, CRM, industry processes Business services CAGR BPaaS 27% Hybrid Private cloud + selective use of public cloud services 70% of public cloud market is in SMB market SaaS • Highest growth • e.g. Web apps, DB, DR PaaS Infrastructure services 40% IaaS • Highest margins (today) • e.g. Dev / Test, Compute, Storage HW Enterprise clients building private cloud Components 23% SW • Clients buy products and / or implementation services Services 2008 2012 Source: IBM (MI), IDC, CIO magazine, BCG analysis

Analysts suggest that the most significant opportunity for cloud services will be applications 1. Applications will be the largest segment representing 37.1 % of the $55B market by 2014 2. The Applications segment includes messaging, conferencing, and team collaboration software and business applications (e.g., CRM, ERP, financial, HCM, PLM, and SCM), delivered via the cloud services model 3. Communications and collaboration applications lead the way for market entry – followed by opportunities for business applications Source IDC April 2010

Intelligence-as-a-Service • Groundbreaking • Monetize ‘data’ as consumable services • Private Cloud • Hybrid Cloud Proposed Cloud-Based Opportunities We have highlighted five categories of cloud-based services that are suitable for Telco cloud offerings- Guiding Principles New Cloud Service • Enhance existing services • Become an early entrant into cloud ‘intelligence’ space • Take market share in the ‘communications’ space • Build value add capabilities to enable ecosystems • Focus on industry verticals, leveraging key relationships and acquisitions Enhanced Cloud Service Applications-as-a-Service Current Offering: • Value Added Service • Targeted at SMB • Hybrid Cloud • Public Cloud Enhanced Capabilities: • Private Cloud • Mobile-enabled • New industry verticals Enhanced Cloud Service Communications-as-a-Service* Current Offering: • Differentiator • Unified Communication Services • IP Voice • Conferencing • Contact Center • Videoconferencing Enhanced Capabilities: • Add’l conferencing features • Contact center and IVR Network Services • Unified communications services targeting healthcare providers, government and SMBs Enhanced Cloud Service Computing-as-a-Service Current Offering: • Table stakes • Infrastructure (IaaS) • Platforms (PaaS) • Public Cloud Enhanced Capabilities: • Infrastructure solution for SMBs • Enhanced storage & security capabilities • Virtual desktop for mid-market customers • Additional capacity/power from new data centers New Cloud Service Business-Process-as-a-Service • Remote business process management • Streamlines transactions • Targeted at SMBs, Industry verticals • Public Cloud

What Did We Do? Our Customer’s Business Cloud Business Benefits SK Telecom is a unit of SK Holdings, one of South Korea’s largest chaebol conglomerates SK Telecom has #1 market share in the domestic wireless market, and #2 market share in the domestic fixed line market SK Telecom is perceived as a technology leader in South Korea Korean language portal based on API extensions to CSP2 Service Portal Development Platform-as-a-Service offering to allow Business Partners to quickly test, develop, and publish new end-user focused WAP services available on SK Telecom network Service Management-enabled Cloud Delivery platform to run new WAP services in a workload optimized fashion. Reduction of new service development time, achieving faster time to market Efficient management of resources, delivering reduction in capex & opex

Our Customer’s Business The Business Challenges What Did We Do? Cloud Business Benefits • DutchCloud is a leading ISP based in the Netherlands, focused on SME customers in a few key industries (Healthcare, Electronics). • DutchCloud offers a range of Cloud based services from fully managed IaaS through to disaster recovery solutions. • Customers select DutchCloud for the quality of service delivered and its service assurance. • DutchCloud was looking for a light-weight, highly functional solution for core cloud service delivery. • Current challenges are to improve the delivery of Cloud services in terms of cost, speed, agility, minimized operations and industrial strength solutions. • Scale delivery costs to business volumes. • Support delivery through a Reseller model. • Rapid deployment of new services in seconds rather than hours. (Deployed 100’s of new VM instances in under 5 minutes). • No/low maintenance, minimized operational administration, and no outages required for upgrades. • Changing the delivery of DR services from cold-standby (capital intensive) to rapidly deployed (utilization efficient) and significantly more cost effective for customers and CSPs. • Implementation of IBM SmartCloud Provisioning as the core delivery platform across multiple compute and storage nodes. • KVM hypervisor delivery for VMs supporting minimized license cost. • Customer, management, and VLAN separation for multi-tenant isolation at the network and presentation layer. • Integration with IBM V7000 Storwize storage and SmartCloud Provisioning to offer customers variable SLAs for storage.

The Business Challenges What Did We Do? Cloud Service Provider in action: Dynamically creates secure virtual, infrastructures for local businesses in hours VNTT wanted to create a shared central infrastructure to deliver flexible infrastructure and software services to small- and mid-sized companies, on a pay-as-you-use pricing model. • Launched the VNTT Cloud Center, built on IBM Service Delivery Manager cloud solution and featuring IBM System x and BladeCenter servers, enabling the dynamic creation of secure virtual infrastructures for local businesses. • Dynamically creates secure virtual, infrastructures for local businesses in hours The benefits: $75 million in savingsover five years 370% projected ROI inthe first year alone “Our vision was to create a platform to foster innovation and growth in the Vietnamese economy, taking advantage of our economy of scale to deliver highly cost-effective enterprise-class IT services to small- and mid-sized businesses,” says Nguyen Minh Tan, CEO, Vietnam Technology and Telecommunication. ”We chose IBM as our trusted partner for delivering commercial cloud services, based on its comprehensive portfolio and proven track record in other client engagements. We knew that IBM had the expertise and the local support to help us leverage cloud in a way that is safe, reliable and efficient for our business.” Nguyen Minh Tan, CEO, Vietnam Technology and Telecommunication

Cloud-Based Solutions Maturity Model Making money in the cloud space requires careful planning “Risk of inaction” As IaaS and PaaS become mature, there will be a Rush to build Vertical Solutions Picking the right Plays with limited investment dollars is crucial Early Adopters are Building Market Share but are also Learning Valuable Lessons Late Majority Early Majority Laggards WSJ: 9/28/2010: SAP committed to 10,000 ByDesign customers by 2010, but due to issues the number is 100...not as successful as expected

To succeed with Cloud Services, CSP’s must be prepared to challenge themselves and the way they ‘think’ Mental Model Possible Thinking Must include ..… • Economics • We can rent our way into the business • We can manage it in house • We ‘white label’ where we can to accelerate entry into the cloud market • We invest in strategic ‘cloud-enabled solutions’ where we can capture market share and offer clear economic differentiation to our customers • We build an ecosystem of partners (suppliers and wholesalers) • Customers • CSP’s value add is brand strength • We need a killer app • Build it and they will come • We need to know our end customers’ value chain and their priorities • Our differentiation is superior, integrated with vertical customer experiences. Our ability to integrate with our existing wholesale solutions portfolio and customers with new types of business solutions. • Technology • Cloud is a technical offering • Platform is Decision #1 • Cloud is more of a business transformational model than it is a technology solution • While platform is critical, customer experience, industry specific solutions and speed-to-market are more important than the platform, as platform can be outsourced • Time to market • “We want to wet our toes” • We follow existing processes to launch new cloud services • Capturing market share early for the lucrative applications space is important. High profit industry solutions cannot be white-labeled. • CSP’s needs an ecosystem where they can rapidly deploy new services in a matter of few weeks from ideation to deployment. • Agile and nimble processes are critical to success 12 IBM Confidential

You can leverage lessons learned from IBM’s experience with CSPs around the world and from operating our own IBM public cloud Cloud providers must offer a a full suite of services to be taken seriously. A combination of premise based and aggregated cloud services are required for maximize flexibility and control Provide entry level and premium offerings for each service. Solution & Operations Market & Marketing Building your own Cloud ecosystem is time consuming -leverage existing storefronts and ISV relationships to get to market quickly. Self-service storefront with integrated marketing will drive demand and reduce churn. CSP Business Model Develop “A Single Strategy” for cloud that covers multiple segments. Owner economics will win for CSPs. Think through offer management. An application can have of multiple offerings and can participate in multiple bundles.

Cloud-based Transformation Models Telco’s cloud-based business model will be a combination of a service innovation model, as well as the creation of a two-sided business model Service Innovation Key Questions • What services should we offer? • How should we sell these services? • How should we price such services? • How should we deliver such services? • How much are we willing to invest in such services? • Should we build these services ourselves? • What is the value of such services to Telco? • How soon are we looking to launch such services? Two-Sided Business Model Key Questions • How does the two-sided business model work? • How does the money flow? • How do we charge customers? • How do we target our customers across various cloud industries/customer segments? • What types of investments do we make, if any? • What types of events do we need to think about? • How do we get started? • What is a realistic timeline? 14

IBM Cloud Service Aggregation Platform - designed to empower CSPs to CREATE, MANAGE, & MONETIZE a broad portfolio of cloud services fast. CREATE MANAGE MONETIZE Infuse Creativity Into the Service Portfolio Aggregate a Wide Variety of Cloud Services Optimize Sales With Self-Service Web Storefront Rapidly Launch PartnerApplications Delegate Administration to Enterprise customers Provide Web 2.0 enriched shopping experience Market White LabeledIBM Cloud Services Leverage Robust and Secure Cloud Service Integration Leverage Intelligencefor Differentiation Deliver a broad portfolio of cloud services through a common platform Ignite Innovation and Differentiate the Service Portfolio Energize Cloud Sales & Optimize the Customer Experience

Business Process as a Service Software as a Service Business Analytics and Optimization Social Business Smarter Cities Smarter Commerce IBM's approach is to match our client’s choice of deployment models & entry strategies Foundation Solutions Services Software as a service coupled with deep industry insights, business process skills and analytics Unprecedented choice, security and portability of applications on IBM’s SmartCloud service delivery platform Easily build and rapidly scale private cloud environments with unparalleled time-to-market, integration and management Commitment to open standards and a broad ecosystem

A robust set of business solutions that leverage IBM’s deep industry and process skills including migration of existing hosted business applications A growing set of infrastructure services and solutions coupled with our deep architecture, integration and implementation skills A broad ecosystem of ISVs leveraging the IBM SmartCloud as a platform for running their business The choice and control to enable clients to develop, deploy and manage custom services IBM Services Client Defined Services Partner Services Application Services ApplicationLifecycle ApplicationResources Application Environments Application Management Integration Infrastructure platform Management and support Availability and performance Security Payment and billing Enterprise Enterprise data center Enterprise A B Managed private cloud Hosted private cloud Shared cloud services IBM’s SmartCloud service delivery platform is a platform for business innovation and growth

Client defined services Industry services Data and Analytics Workplace Security Resilience Enterprise applications Partner services Application Services Enterprise Enterprise data center Enterprise A B Managed private cloud Hosted private cloud Shared cloud services IBM is building a robust ecosystem designed to address a broader set of enterprise requirements Cloud Application Providers Cloud Services Solution Providers Cloud Technology Providers Cloud Infrastructure Providers Cloud Builders

Protecting and risk management in the cloud building on traditional approaches, applied to new models. Each model has different aspects to consider. IBM Cloud SecurityOne Size Does Not Fit All Different security controls are appropriate for different cloud needs - the challenge becomes one of integration, coexistence, and recognizing what solution is best for a given workload. 19

Brokering a range of services is a compelling value proposition for enterprise customers who are looking at Cloud to reduce IT complexity “The future of cloud computing will be permeated with the notion of brokers negotiating relationships between providers of cloud services and the service customers.” Market Implication: “Customers will be able to consume multiple cloud services in a more user-friendly fashion, with the complexities of managing multiple service providers throughout the supply chain reduced significantly, if not removed altogether.” In a 2011 survey, Gartner found that 46% of enterprise customers indicated that the Cloud Service Broker model was relevant to their selection of cloud service providers.Source: Gartner

Complexity drives the need for Cloud Service Brokering . . . and provides an opportunity for differentiation On Premise Cloud Applications Data Center Infrastructure CSP White Label Infrastructure Cloud Applications Cloud Storefronts Companies for illustration only

Cast Iron demonstrates IBM’s commitment to a Smarter Services platform. Leverage your existing capital expense investments while avoiding technology lock-in • Comprehensive range of supported hypervisors • Fully extendable via an Open API • Advanced hybrid Cloud integration • Hardware vendor agnostic • Deploy on IBM systems for optimal service management visibility, cost and control • Accelerate on-boarding of new partner provided services with pre-configured templates and policies 22

IBM provides options to Customers on how private clouds can be delivered. Which option is right for you? • Flexibility • Time to Results • Install Base • Workload • Skillset A quick start for Cloud: Building a private cloud in your enterprise IBM CloudBurst Pre-Integrated Bundles Custom Private Cloud • Unlimited Configurations • Custom Build • Product Level Support • Longer installation • Installed to support multiple platforms and custom components • Enterprise Pricing • 4 Standard Configurations • Pre-Built at Factory • Integrated Support • 10 day installation • Self contained & expandable to heterogeneous infrastructure and custom components • Starter Kit Pricing

IBM Cloud Lab IBM Cloud Data Center IBM Centers Deliver & Manage Cloud Services Around the World IBM Worldwide Support Centers 7 Cloud Data Centers 11 Cloud Labs 57 Global Delivery Centers 54 Global Command Centers Toronto Wroclaw, Poland Dublin Boulder, CO Ehningen, Germany Tokyo Beijing Seoul Raleigh, NC Silicon Valley, CA Hong Kong Hanoi Bangalore Singapore Sao Paulo Johannesburg

Driving client-focused open standards andinteroperability. IBM solutions are built on a comprehensive,open reference model. • Provides guidance to the multiple cloud standards-defining bodies. • Establishes the criteria for open- standards-based cloud computing. • Delivers content in the form of best practices, case studies, use cases, requirements, gap analysis and recommendations for cloud standards. companies areparticipating. operate outside the IT realm.

Lessons Learned from Global Cloud InitiativesFocus, Success, Scale Establish a cloud SP strategy, in alignment with your business and market and then transform your IT in consequence Get into the market – it takes time to build critical mass in your company Self-service ease-of-use is critical to success Do what you do best first – infrastructure, communications, collaboration Continually refresh product catalog to maintain customer interest – draw customers into an expanding set of services Support multiple offerings per product – different buying behaviors SMB most lucrative market for cloud services Some business applications are complex – channel strategy is critical – start small, grow fast

Enabling Innovative Cloud Services for CSPs